How to scale your business in an evolving environment
Advisers leaving the industry are missing out on a major opportunity to pass on their knowledge and experience to the next generation.
Managing key-person risk is critical for the long-term success of any business. If we consider the exodus of experienced advisers from the financial advice industry along these lines, then the failure to pass on industry knowledge could be a risk to the longevity of the profession.
The advice industry is currently going through an important transformation that will likely create a thriving sector of wealth professionals who will build successful businesses on a foundation of new education and ethics standards.
But an important part of this journey is gaining the insights of those who have helped build the industry and run successful practices themselves.
Momentum Intelligence, in partnership with the MLC Licensee Network, surveyed over 500 advisers and found that 40 per cent have no programs or strategies in place to manage the potential loss of industry knowledge from the retirement of advisers.
Those who operate under a licensee are far more likely to have no programs or strategies in place (45.4 per cent) compared to those who have their own Australian Financial Services license (AFSL) (25 per cent). These findings reveal a major opportunity for licensees to help experienced advisers transition out of the industry in a way that rewards them for their knowledge, skills and experience.
Pathway to professionalism
Practices that are proactively managing the risk of potential loss of industry knowledge are using initiatives such as succession planning (30 per cent), establishing mentor programs (11.6 per cent), hiring consultants (9 per cent), and developing internships (6.5 per cent).
Licensees can play a far bigger role in either providing these services or facilitating the knowledge sharing between experienced advisers and those new to the industry.
We know that many advisers are approaching retirement. Others may decide that they will not pursue the further education requirements needed to continue offering financial advice. Yet these advisers remain highly valuable to the future of the profession.
Innovative, forward-thinking licensees should be offering retiring advisers the opportunity to mentor the next generation, become consultants to new practices and use their decades of industry experience to help drive the profession to new heights.
The value of industry knowledge and the experience of mature advisers needs to be recognised. Leadership guru and author John C. Maxwell1 wrote that one of the greatest values of mentors is their ability to see ahead what others cannot see and to help them navigate a course to their destination1.
Licensees that facilitate effective mentoring relationships between retiring advisers and newcomers will be instrumental in the advice industry’s pathway to professionalism.
If you would like to find out more about MLC Licensee Network and the options we can offer you and your business, email me on firstname.lastname@example.org or leave your details here for a call back.
1Maxwell, John C. 2008, The Leadership Handbook: 26 Critical Lessons Every Leader Needs, Thomas Nelson, Nashville.
This article has been prepared by Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL number 230323 and Godfrey Pembroke Group Pty Ltd ABN 38 078 629 973 AFSL 245451, each of which is a member of the IOOF group of companies. IOOF does not guarantee or otherwise accept any liability in respect of Consultum Financial Advisers Pty Ltd or Godfrey Pembroke Group Pty Ltd or any services provided by them.